Everything You Need to Know About Closing on a House

You’ve made an offer, signed a purchase agreement and now it’s time to close on your new home. That’s exciting, but it can also be scary – especially if you’re a first-time homebuyer.

At Addition Financial, we take pride in making sure our members understand everything about the process of buying a new home, from pre-approval to closing. We’ve put together this post explaining everything you need to know about closing on a house, so you can be prepared.

What to Do Before the Closing

By the time you get to the week of your closing, the hard part of buying a house is mostly over. You’ve gone through the mortgage approval process, looked at homes, haggled with the owner, sweated through the home inspection and signed a purchase agreement.

There are still a couple of key things you need to do in the final days before your closing. Here they are:

1. Review your loan terms and settlement statement to make sure you’re clear on the terms of your mortgage. Call your lender to ask questions if you have them.
2. Schedule a walk-through of your new home 24 hours before the closing. It’s standard for buyers to have the right to do a walk-through. When you go, make sure the home is in the agreed-upon condition and the old owners have vacated the premises (unless you’ve agreed otherwise.) Also – and this is very important – check to make sure any agreed-upon repairs or improvements have been completed to your satisfaction.

These two steps are the last things you must do before you go to the closing. Doing them will ensure you can feel confident in going through with the closing. If there’s an issue with repairs or the condition of the home, contact your lender immediately and postpone the closing until they can be resolved.

What to Bring to the Closing

As you prepare for the big day, you’ll want to make sure you have everything you need to ensure the closing goes smoothly. Here’s a quick checklist you can use:

• A copy of your home inspection report
• A copy of your purchase agreement with the seller
• Proof of FHA mortgage insurance, if required
• Proof of homeowner’s insurance, if required
• Photo ID matching the name on the mortgage

Ask your mortgage lender if additional documents are needed.

If you’re a newlywed and just changed your name, you’ll need to make sure to update your photo ID prior to the closing. Mortgage agreements must be notarized, and a notary won’t be able to do what they need to do if there’s a discrepancy between the paperwork and your ID.

What to Expect During the Closing

Attending a closing can be intimidated. You can expect quite a few people to be there, including:

• You and any other buyers
• The sellers
• Your attorney if you’ve hired one
• The seller’s attorney
• The buyer’s and seller’s real estate agents
• A representative from a title company
• A representative from your bank or credit union

The lender’s representative will need to verify the title is clear and check everything before you sign. The closing may take several hours depending on factors that you can and can’t control.

You should be prepared to sign your name repeatedly. Most people who haven’t bought a home before don’t realize how much paperwork is involved. It can be a bit daunting to sign your name so many times, but it’s a necessary part of the process.

The representative from the lender should have marked all the places in the contracts where you need to sign. It’s common for lenders to use colorful tags. Expect to sign your name in full and initial the contract wherever the lender tells you to.

We strongly suggest you allow for extra time in your schedule on the day of your closing. The lender might tell you to allow two hours. However, it’s not a good idea to schedule a dental cleaning, teacher conference or client appointment for two hours after the start of closing. If someone is late or you’re thrown a curveball, you’ll be stressed out worrying about your other obligations.

Speaking of curveballs, there’s always the potential for issues to arise during your closing. A name might be misspelled in the contract or you might have last-minute questions. These things are as much part of the process as anything else. Do your best to stay calm and roll with the punches.

As you prepare for your closing, remember, the most important thing is you’re on your way to becoming the proud owner of your new home. The process may be a long one, but the closing is the final hurdle on your road to homeownership.

To learn how Addition Financial’s flexible mortgage options can help you achieve your dream of homeownership, please click here.